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Chapter Five - Procurement

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Consistent with the principles set out in Article 101(3) (Mutually
Agreed Principles) and the statement of their application set out in
Article 101(4), the purpose of this Chapter is to establish a
framework that will ensure equal access to procurement for all
Canadian suppliers in order to contribute to a reduction in purchasing
costs and the development of a strong economy in a context of
transparency and efficiency.

This Chapter applies to measures adopted or maintained by a Party
relating to procurement within Canada by any of its entities listed
in Annex 502.1A, where the procurement value is:

$25,000 or greater, in cases where the largest portion of the
procurement is for goods;

$100,000 or greater, in cases where the largest portion of
the procurement is for services, except those services
excluded by Annex 502.1B; or

$100,000 or greater, in the case of construction.

Subject to paragraphs 3 and 4 and Article 517(3), entities listed
in Annexes 502.2A and 502.2B are excluded from this Chapter.

The entities listed in Annex 502.2B shall be free to pursue
commercial procurement practices that may otherwise not comply with
this Chapter. Nevertheless, the Parties shall not direct those
entities to discriminate against the goods, services or suppliers
of goods or services of any Party, including those related to
construction.

The Provinces, pursuant to negotiations under Article 517(1), agree
to extend coverage of this Chapter to municipalities, municipal
organizations, school boards and publicly-funded academic, health
and social service entities no later than June 30, 1996.

Each Party shall communicate any modification to its lists of
entities set out in the Annexes to this Article to all other
Parties in writing without delay.

Subject to Article 404 (Legitimate Objectives), with respect to
measures covered by this Chapter, each Party shall accord to:

the goods and services of any other Party, including those
goods and services included in construction contracts,
treatment no less favourable than the best treatment it
accords to its own such goods and services; and

the suppliers of goods and services of any other Party,
including those goods and services included in construction
contracts, treatment no less favourable than the best
treatment it accords to its own suppliers of such goods and
services.

With respect to the Federal Government, paragraph 1 means that,
subject to Article 404 (Legitimate Objectives), it shall not
discriminate:

between the goods or services of a particular Province or
region, including those goods and services included in
construction contracts, and those of any other Province or
region; or

between the suppliers of such goods or services of a
particular Province or region and those of any other Province
or region.

Except as otherwise provided in this Chapter, measures that are
inconsistent with paragraphs 1 and 2 include, but are not limited
to, the following:

the imposition of conditions on the invitation to tender,
registration requirements or qualification procedures that
are based on the location of a supplier's place of
business or the place where the goods are produced or the
services are provided or other like criteria;

the biasing of technical specifications in favour of, or
against, particular goods or services, including those goods
or services included in construction contracts, or in favour
of, or against, the suppliers of such goods or services for
the purpose of avoiding the obligations of this Chapter;

the timing of events in the tender process so as to prevent
suppliers from submitting bids;

the specification of quantities and delivery schedules of a
scale and frequency that may reasonably be judged as
deliberately designed to prevent suppliers from meeting the
requirements of the procurement;

the division of required quantities or the diversion of
budgetary funds to subsidiary agencies in a manner designed
to avoid the obligations of this Chapter;

the use of price discounts or preferential margins in order
to favour particular suppliers; and

the unjustifiable exclusion of a supplier from tendering.

No Party shall impose or consider, in the evaluation of bids or the
award of contracts, local content or other economic benefits
criteria that are designed to favour:

the goods and services of a particular Province or region,
including those goods and services included in construction
contracts; or

the suppliers of a particular Province or region of such
goods or services.

Except as otherwise required to comply with international
obligations, a Party may accord a preference for Canadian value-added
, subject to the following conditions:

the preference for Canadian value-added must be no greater
than 10 per cent;

the Party shall specify in the call for tenders the level of
preference to be used in the evaluation of the bid; and

all qualified suppliers must be informed through the call for
tenders of the existence of the preference and the rules
applicable to determine the Canadian value added.

Except as otherwise required to comply with international
obligations, a Party may limit its tendering to Canadian goods or
suppliers, subject to the following conditions:

the procuring Party must be satisfied that there is
sufficient competition among Canadian suppliers;

all qualified suppliers must be informed through the call for
tenders of the existence of the preference and the rules
applicable to determine Canadian content; and

the requirement for Canadian content must be no greater than
necessary to qualify the procured good as a Canadian good.

Each Party shall ensure that procurement covered by this Chapter is
conducted in accordance with the procedures set out in this
Article.

A call for tenders shall be made through one or more of the
following methods:

the use of an electronic tendering system that is equally
accessible to all Canadian suppliers;

publication in one or more predetermined daily newspapers
that are easily accessible to all Canadian suppliers; or

the use of source lists, provided that, in respect of any
source list:

registration on the source list is consistent with
Article 504;

all registered suppliers in a given category are
invited to respond to all calls for tenders in that
category; and

a supplier that meets the conditions for registration
on the source list is able to register at any time.

Each Party shall, no later than January 1, 1995, designate the
electronic tendering system or predetermined daily newspapers
referred to in paragraphs 2(a) and (b) that it will use when making
its calls for tenders. If a Party decides to change the system or a
newspaper so designated, it shall notify the other Parties at least
30 days prior to implementing the change.

A notice of a call for tenders shall contain at least the following
information:

a brief description of the procurement contemplated;

the place where a person may obtain information and tender
documents;

the conditions for obtaining the tender documents;

the place where the tenders are to be sent;

the date and time limit for submitting tenders;

the time and place of the opening of the tenders in the event
of a public opening; and

a statement that the procurement is subject to this Chapter.

Each Party shall provide suppliers with a reasonable period of time
to submit a bid, taking into account the time needed to disseminate
the information and the complexity of the procurement.

In evaluating tenders, a Party may take into account not only the
submitted price but also quality, quantity, delivery, servicing,
the capacity of the supplier to meet the requirements of the
procurement and any other criteria directly related to the
procurement that are consistent with Article 504. The tender
documents shall clearly identify the requirements of the
procurement, the criteria that will be used in the evaluation of
bids and the methods of weighting and evaluating the criteria.

An entity may limit tenders to goods, services or suppliers
qualified prior to the close of call for tenders. However, the
qualification process must itself be consistent with Article 504.
An invitation to qualify shall be published at least annually by a
method referred to in paragraph 2(a) or (b) or shall be distributed
to suppliers listed on a source list referred to in paragraph 2(c).

An entity may limit a contract award to goods, services or
suppliers that have been assessed (for example, certified,
evaluated, qualified, registered or verified) by an independent
nationally-recognized and industry-supported organization such as
the Standards Council of Canada.

If a procurement exempted from the obligations of this Chapter
under paragraph 11 or 12 or Article 507 or 508 is publicly tendered
in a daily newspaper or on an electronic tendering system, the
tender notice shall indicate the restrictions and highlight the
practices that do not conform with this Article or Article 504.

An entity that uses a source list shall:

include information in its policies, procedures and practices
describing the circumstances and manner in which the source
list is used and any qualification criteria that a supplier
must meet in order to register on the source list;

provide written confirmation of registration to any supplier
that requests registration on the source list or indicate the
qualification criteria that were not met; and

on request by any Party, provide that Party with the tender
notice and the list of suppliers that will be invited to bid
on a specific tender.

An entity of a Party may use procurement procedures that are
different from those described in paragraphs 1 through 10 in the
following circumstances, provided that it does not do so for the
purpose of avoiding competition between suppliers or in order to
discriminate against suppliers of any other Party:

where an unforeseeable situation of urgency exists and the
goods, services or construction cannot be obtained in time by
means of open procurement procedures;

where goods or consulting services regarding matters of a
confidential or privileged nature are to be purchased and the
disclosure of those matters through an open tendering process
could reasonably be expected to compromise government
confidentiality, cause economic disruption or otherwise be
contrary to the public interest;

where a contract is to be awarded under a cooperation
agreement that is financed, in whole or in part, by an
international cooperation organization, only to the extent
that the agreement between the Party and the organization
includes rules for awarding contracts that differ from the
obligations set out in this Chapter;

where construction materials are to be purchased and it can
be demonstrated that transportation costs and technical
considerations impose geographic limits on the available
supply base, specifically in the case of sand, stone, gravel,
asphalt, compound and pre-mixed concrete for use in the
construction or repair of roads;

where compliance with the open tendering provisions set out
in this Chapter would interfere with a Party's ability to
maintain security or order or to protect human, animal or
plant life or health; and

in the absence of a receipt of any bids in response to a call
for tenders made in accordance with the procedures set out in
this Chapter.

Where only one supplier is able to meet the requirements of a
procurement, an entity may use procurement procedures that are
different from those described in paragraphs 1 through 10 in the
following circumstances:

to ensure compatibility with existing products, to recognize
exclusive rights, such as exclusive licences, copyright and
patent rights, or to maintain specialized products that must
be maintained by the manufacturer or its representative;

where there is an absence of competition for technical
reasons and the goods or services can be supplied only by a
particular supplier and no alternative or substitute exists;

or the procurement of goods or services the supply of which
is controlled by a supplier that is a statutory monopoly;

he purchase of goods on a commodity market;

or work to be performed on or about a leased building or
portions thereof that may be performed only by the lessor;

for work to be performed on property by a contractor
according to provisions of a warranty or guarantee held in
respect of the property or the original work;

for a contract to be awarded to the winner of a design
contest;

for the procurement of a prototype or a first good or service
to be developed in the course of and for a particular
contract for research, experiment, study or original
development, but not for any subsequent purchases;

for the purchase of goods under exceptionally advantageous
circumstances such as bankruptcy or receivership, but not for
routine purchases;

for the procurement of original works of art;

for the procurement of subscriptions to newspapers, magazines
or other periodicals; and

Exceptional Circumstances

A Party may, under exceptional circumstances, exclude a procurement
from the application of this Chapter for regional and economic
development purposes, provided that:

the exclusion of the procurement does not operate to impair
unduly the access of persons, goods, services or investments
of another Party;

the exclusion of the procurement is not more trade
restrictive than necessary to achieve its specific objective;

notice of all such excluded procurements is provided by one
or more of the methods specified in Article 506(2) and the
notice provides details of the exceptional circumstances; and

the Party seeks to minimize the discriminatory effects of the
exclusion on suppliers of the other Parties.

In the case of a dispute relating to a procurement excluded from
the application of this Chapter under paragraph 1, factors such as
the following are to be taken into account in the dispute
resolution process:

the frequency of the use by the Party of such exclusions for
its procurements;

the extent to which the use by the Party of the exclusion for
the particular procurement may contribute to economic
development objectives or to the reduction of economic
disparities;

whether the use of the exclusion for the particular
procurement was applied in a manner to minimize the
discrimination among bidders; and

the extent to which the use by the Party of the exclusion
affects the development of competitive Canadian companies.

Transitional and Non-Conforming Procurement Measures

A Party may continue the transitional procurement policies and
programs listed in Column I of Annex 508.3 until January 1, 1996.

A Party may continue the non-conforming procurement policies and
programs listed in Column II of Annex 508.3, provided that the
Party:

prepares an annual written report on such policies and
programs; and

conducts a review of such policies and programs, no later
than January 1, 1998, to ensure that they meet their regional
and economic objectives.

Nothing in this Chapter requires an entity to breach confidentiality
obligations imposed by law or to compromise security or commercially
sensitive or proprietary information identified by a supplier in its
tender documents.

Each Party shall report annually to the other Parties on
procurement by its entities listed in Annex 502.1A. The report
shall contain the number and aggregate values of the procurements
awarded that equal or exceed the applicable threshold value
specified in Article 502. The report shall also contain the
estimated aggregate values of contracts awarded below the
applicable threshold values. The aggregate values shall be broken
down by each category of procurement, being goods, services and
construction.

The Parties shall, before the date of entry into force of this
Agreement, develop a general mechanism to report through an
electronic tendering system as provided in Article 516(3).

Each Party shall report annually to the other Parties on
procurement above the applicable threshold value specified in
Article 502 for each of articles 506(11)(a) and (e) and 506(12)(a)
and (h) and on all procurement excluded under Article 508(1) and
policies and programs listed in Column I of Annex 508.3, the
following information:

the number of contracts;

a description including the value of what was procured for
each procurement; and

the total value of the procurements.

Statistics shall be collected on the basis of the fiscal year.

Each Party shall provide annually to the Secretariat information
suitable for publication on that Party's procedures for
procurement, and specify:

the name of the contact point to which inquiries or
complaints may be made;

the name of any daily newspaper or electronic tendering
system used; and

the place where information may be obtained on how to
register on a source list or acquire access to any electronic
tendering system used.

The Secretariat shall compile the information received from the
Parties under paragraph 5, in respect of a year, into one
advertisement that separately displays the insignia and pertinent
information of each Party in a format suitable for newspaper
publication. Each Party shall annually publish the advertisement
within its territory by either an electronic tendering system or a
newspaper.

Where, in the context of a procurement by another Party, a Party
considers that its rights under this Chapter may have been
adversely affected, that Party may request, with the intent of
avoiding a dispute, any relevant bid information concerning that
procurement from the procuring Party. On receipt of such a request,
the procuring Party shall promptly provide such information.

This Article applies to complaints regarding procurement by
Provinces.

Where, in respect of a specific procurement, a supplier has had
recourse to the dispute settlement procedures under another
procurement agreement, it may not utilize the bid protest
procedures of this Chapter for that specific procurement.

The supplier shall communicate its concerns or complaints in
writing to the procuring Party with a view to resolving them.

Where a supplier has exhausted all reasonable means of recourse
with respect to a complaint with the procuring Party, it may make a
written request to the contact point in the Province where the
supplier is located to seek resolution of the complaint.

Where the contact point determines that the complaint is
reasonable, it shall, on behalf of the supplier, within 20 days
after the date of delivery of the request, approach the contact
point of the procuring Party and make representations on the
supplier's behalf. Where the contact point determines that the
complaint is unreasonable, it shall provide a written notice to the
supplier within 20 days after the date of delivery of the request
setting out reasons for the decision. Failure to provide such
notice is deemed to be notice for the purposes of Article
1712(2)(a) (Initiation of Proceedings by Persons).

Where the matter has not been resolved under paragraph 5 within 20
days after the date of delivery of the supplier's request, the
Party in whose territory the supplier is located may make a written
request for consideration of the complaint by a review panel. The
request shall be delivered to the procuring Party and to the
Secretariat. Where the Party in whose territory the supplier is
located determines the complaint to be unreasonable, it shall
provide written notice to the person within 20 days after the date
of delivery of the supplier's request. Failure to provide such
notice is deemed to be notice for the purposes of Article
1712(2)(b) (Initiation of Proceedings by Persons).

The review panel shall consider the complaint in accordance with
the following:

each Party shall, before the date of entry into force of this
Agreement, establish a roster consisting of competent and
impartial people who will be able to serve on and chair
review panels, and deliver notice of the roster to the other
Parties;

the contact points of the two Parties shall, within five days
after the date of delivery of the request by the Secretariat,
appoint panellists from the rosters. A panel shall usually
consist of a maximum of three members, one selected from each
of the rosters of the Parties involved, and a chairperson,
also competent and impartial, to be ratified by panel
members;

Parties may agree to choose a chairperson who is mutually
acceptable and who is not listed on their rosters;

notwithstanding paragraphs (b) and (c), any other composition
of a panel acceptable to both Parties is permissible;

the panel shall begin consideration of a complaint within
five business days after its formation;

the panel should complete its work within 20 business days
after its formation. On formal request, an extension owing to
extraordinary circumstances may be granted with notice to all
Parties;

the panel shall establish procedures and guidelines
appropriate to each case. The contact points of both Parties
shall provide secretarial and research support to the panel
and maintain necessary records;

the panel may investigate the challenge to determine whether
there is an inconsistency with this Chapter. Where necessary,
the panel is entitled to receive a copy of pertinent tender
documents and other relevant support information that it may
require to assist in its determination. The panel shall keep
confidential all information obtained by it in accordance
with Article 510;

the panel may make written recommendations to the procuring
Party and, where appropriate, to the Party in whose territory
the supplier is located, concerning practices related to the
procurement in question that the panel considers to be
inconsistent with this Chapter;

the panel shall deliver its report to both Parties. Both
Parties shall consult with each other and the supplier with
the object of reaching a mutually acceptable accommodation
based on the report; and

both Parties shall share the fees and expenses of the panel
equally.

The contact points shall, within 10 business days after the date of
delivery of the report, append to the report a description of the
accommodation or, if an agreement on accommodation has not been
reached, the different positions of both Parties. The report is
complete and final at this stage.

Where a Party considers, as a result of a panel's report and
subsequent consultations, or another series of similar unresolved
complaints, that the other Party is not complying with the terms of
this Chapter, the Party may have recourse to Article 1709
(Non-Implementation — Publicity) or 1710 (Non-Implementation —
Retaliatory Action).

This Article applies to complaints regarding procurement by the
Federal Government.

In order to promote fair, open and impartial procurement
procedures, the Federal Government shall adopt and maintain bid
protest procedures for procurement covered by this Chapter that:

allow suppliers to submit bid protests concerning any aspect
of the procurement process, which for the purposes of this
Article begins after an entity has decided on its procurement
requirement and continues through to the awarding of the
contract;

encourage suppliers to seek a resolution of any complaint
with the entity concerned prior to initiating a bid protest;

ensure that its entities accord fair and timely consideration
to any complaint regarding procurement covered by this
Chapter;

limit the period within which a supplier may initiate a bid
protest, provided that the period is at least 10 business
days from the time when the basis of the complaint became
known or reasonably should have become known to the supplier;

permit a supplier that does not achieve a successful
resolution of its complaint to bring the matter to the
attention of an authority, with no substantial interest in
the outcome, to receive and consider the complaint and make
appropriate findings and recommendations with respect to the
complaint;

require the reviewing authority to provide its findings and
recommendations in writing and in a timely manner and make
them available to the Parties; and

require the reviewing authority to specify its bid protest
procedures in writing and make them generally available.

The reviewing authority may:

recommend, where appropriate, a delay in awarding a proposed
contract pending the resolution of the bid protest;

issue a recommendation to resolve the bid protest, which may
include directing the entity to re-evaluate offers or
terminate or re-compete the contract in question;

recommend, where appropriate, the award of compensation for
lost profit or the costs associated with filing the complaint
and preparing the bid; and

make, where appropriate, written recommendations to the
entity concerning practices that the reviewing authority
considers to be inconsistent with this Chapter.

In the event of an inconsistency between a provision of this Chapter
and a provision of any comparable procurement liberalization agreement
entered into by two or more Parties before the date of entry into
force of this Agreement or subsequently under Article 1800 (Trade
Enhancement Arrangements), the provision that is more conducive to
trade liberalization prevails to the extent of the inconsistency.

Subject to Article 502(4), the Parties shall, within 12 months
after the date of entry into force of this Agreement, undertake a
review to:

assess whether this Chapter has met its objectives;

assess and adjust threshold levels, as necessary;

revise this Chapter to accommodate changing principles under
this Agreement; and

review the opportunities for progress related to public
procurement not covered by or excluded from this Chapter.

The Parties shall conduct subsequent reviews in March of each
fiscal year and shall present their findings and recommendations to
the Committee for inclusion in its annual report on the Agreement.

The Parties shall, no later than January 1, 1995, establish a
working group on electronic tendering to:

review the operation of electronic tendering systems in
relation to the provisions of this Chapter;

develop common approaches for improving:

the cost effectiveness and efficiency for suppliers;

the accessibility of information to governments and
suppliers; and

the quality of information and service to suppliers;

design ways to maximize the use of a common system or to
ensure that the electronic tendering systems used by the
Parties are fully compatible and accessible; and

develop a process for selecting the supplier or suppliers of
a common electronic tendering system.

The Parties shall review the opportunity to harmonize or reconcile
the bid protest procedures provided in articles 513 and 514 and
make appropriate recommendations to the Committee no later than
three years after the date of entry into force of this Agreement.

The Parties shall, before the date of entry into force of this
Agreement, review and finalize the list of excluded services set
out in Annex 502.1B.

The Provinces shall enter into negotiations, to be concluded no
later than June 30, 1995, for the special provisions required to
extend coverage of this Chapter to municipalities, municipal
organizations, school boards and publicly-funded academic, health
and social service entities.

Subject to articles 1810(5), (6) and (7) (Future Negotiations), the
Parties shall enter into negotiations, to be concluded no later
than June 30, 1996, with a view to reducing, modifying or amending
the list of entities set out in Annex 502.2A in order to achieve
reciprocity by, in particular, listing such entities in either
Annex 502.1A or 502.2B.

If, as a result of negotiations under paragraph 2, a Party
maintains a list of entities in Annex 502.2A, that Party may only
direct the procurement of those entities in accordance with the
following:

the direction does not operate to impair unduly the access of
persons, goods, services or investments of another Party;

the direction is not more trade restrictive than necessary to
achieve its specific objective;

the Party complies with articles 1801(3) through (5)
(Regional Economic Development); and

the direction is part of a general framework of regional
economic development as defined in articles 1801(8) and (9)
(Regional Economic Development).

If, after negotiations under paragraph 2, a Party fails to consent
to the reduction, modification or amendment of its list of entities
set out in Annex 502.2A, any other Party may:

direct its comparable entities to exclude suppliers of that
Party with respect to particular procurements; or

apply specific threshold levels to suppliers of that Party,
provided that such threshold levels have economic effects
equivalent to those that would have been taken in regard to
the comparable entities referred to in paragraph (a).

means a call for competitive bids from suppliers, inviting them to
submit a tender or proposal for the purpose of a procurement;

Canadian good

means a good produced exclusively from domestic materials, a good
manufactured in Canada or a good which if exported outside of
Canada would qualify as a good of Canada under appropriate rules of
origin;

Canadian supplier

means a supplier that has a place of business in Canada;

Canadian value-added

means:

in relation to services, the proportion of the service
contract performed by residents of Canada; and

in relation to goods, the difference between the dutiable
value of imported goods and the selling price, taking into
account any value added by manufacturers and distributors,
and including any costs incurred in Canada related to:

research and development;

sales and marketing;

communications and manuals;

customization and modifications;

installation and support;

warehousing and distribution;

training; and

after-sales service;

construction

means a construction, reconstruction, demolition, repair or
renovation of a building, structure or other civil engineering or
architectural work and includes site preparation, excavation,
drilling, seismic investigation, the supply of products and
materials, the supply of equipment and machinery if they are
included in and incidental to the construction, and the
installation and repair of fixtures of a building, structure or
other civil engineering or architectural work, but does not include
professional consulting services related to the construction
contract unless they are included in the procurement;

electronic tendering

means the use of a computer-based system directly accessible by
suppliers and providing them with information related to calls for
tenders and requests for information;

goods

means, in relation to procurement, moveable property (including the
costs of installing, operating, maintaining or manufacturing such
moveable property) and includes raw materials, products, equipment
and other physical objects of every kind and description whether in
solid, liquid, gaseous or electronic form, unless they are procured
as part of a general construction contract;

information technology

means software, electronic equipment or combinations thereof used
to collect, store, process, communicate, protect or destroy
information in all its forms, particularly in the form of text,
symbol, sound and image;

place of business

means an establishment where a supplier conducts activities on a
permanent basis that is clearly identified by name and accessible
during normal working hours;

procurement

means the acquisition by any means, including by purchase, rental,
lease or conditional sale, of goods, services or construction, but
does not include:

any form of government assistance such as grants, loans,
equity infusion, guarantees or fiscal incentives; or

government provision of goods and services to persons or
other government organizations;

procurement procedures

means the processes by which suppliers are invited to submit a
tender, a proposal, qualification information, or a response to a
request for information and includes the ways in which those
tenders, proposals or information submissions are treated;

procurement value

means the estimated total financial commitment resulting from a
procurement, not taking into account optional renewals when the
compulsory part of the contract is of at least one year's
duration;

qualification of goods and services

means a process whereby a buyer establishes a list of goods or
services capable of responding to a specific need;

request for information

means a procurement procedure whereby suppliers are provided with a
general or preliminary description of a problem or need and are
requested to provide information or advice about how to better
define the problem or need, or alternative solutions. It may be
used to assist in preparing a call for tenders;

request for qualification

means a procurement procedure used for the qualification of goods
or services or to invite suppliers, if they meet the required
qualification criteria, to register on a permanent source list or
on a particular source list intended for a specific tender or some
specific subsequent tenders;

services

means all services including printing, but does not include those
services excluded by Annex 502.1B;

statutory monopoly

means an enterprise that in any relevant market in the territory of
a Party has been designated by law or by governmental authority as
the sole provider of a good or service;

supplier

means a person who, based on an assessment of that person's
financial, technical and commercial capacity, is capable of
fulfilling the requirements of a procurement and includes a person
who submits a tender for the purpose of obtaining a construction
procurement;

tender

means a response to a call for
tenders;

technical specification

means a specification that sets out characteristics of goods or
their related processes and production methods, or characteristics
of services or their related operating methods, including
applicable administrative provisions, and may also include or deal
exclusively with terminology, symbols, packaging, marking or
labelling requirements as they apply to a good, process, or
production or operating method.

services that in the Province issuing the tender may, by
legislation or regulation, be provided only by any of the
following licensed professionals : medical doctors, dentists,
nurses, pharmacists, veterinarians, engineers, land
surveyors, architects, chartered accountants, lawyers and
notaries;

services for sporting events procured by organizations whose
main purpose is to organize such events;

services of financial analysts or the management of
investments by organizations who have such functions as a
primary purpose;

financial services respecting the management of government
financial assets and liabilities (i.e. treasury operations),
including ancillary advisory and information services,
whether or not delivered by a financial institution;

health services and social services; and

advertising and public relation services.

The foregoing is an illustrative list. The Parties shall, before
the date of entry into force of this Agreement, review the list and
reduce it in accordance with the principle of open government
procurement.

Annex 502.1B
Interpretive Note

(Services Covered by Chapter 5)

Annex 502.1B provides a list of services excluded from the coverage
of Chapter 5 (Procurement). The Parties recognize that there may be
difficulties in distinguishing between contracts for
service which may be the subject of procurement by a Party and
contracts of service which may be categorized as
employer-employee relationships and which are not intended by the
Parties to be subject to the procurement obligations found in
Chapter 5. To reduce any difficulties in making such a distinction,
to aid in the application of the obligations in Chapter 5 and to
clearly state their original intent, the Parties issue this
interpretive note.

Contracts of service are not the procurement of services within the
meaning of Chapter 5. Contracts of service is a term which is not
to be construed narrowly but rather refers to an employer-employee
relationship between a Party and one or more individuals.

The Parties recognize that the existence of an employer-employee
relationship may be determined according to various tests. For the
purposes of determining whether a contract is subject to the
procurement obligations of Chapter 5 (or an employer-employee
relationship which is not subject to the chapter), the Parties are
of the view that consideration should be given to the various
elements which constitute the relationship between a Party and an
individual or individuals, including the nature of the work and the
circumstances in which it is performed.

In making a determination as to whether there is an
employer-employee relationship between a Party and an individual or
individuals, the Parties also believe that consideration should be
given, among other factors, to whether:

the Party reserves the right of direction and control over
the individual or individuals:

the Party is responsible for remuneration;

the Party hires and has the power to dismiss the individual
or individuals;

the Party is believed to be the employer by the employee or
employees;

there exists an intention to create an employer-employee
relationship, or

there is a chance of profit or risk of loss for the
individual or individuals.

This Annex includes entities that are not accountable to executive
branches of governments of the Parties, entities whose bjective is
national security, businesses of a commercial nature or in competition
with the private sector, and state monopolies involved in the
transformation and distribution of goods and services.

This Annex includes entities that are businesses of a commercial
nature or in competition with the private sector, and state monopolies
involved in the transformation and distribution of goods and services.

Newfoundland

Lower Churchill Development Corporation

Marystown Shipyard Ltd.

Newfoundland Farm Products

Newfoundland Hardwoods Limited

Vinland Industries

Nova Scotia

Check-Inns Limited

Nova Scotia Liquor Commission

Nova Scotia Lottery Commission

Nova Scotia Research Foundation

Nova Scotia Resources Limited

Sydney Steel Corporation

Prince Edward Island

NIL

New Brunswick

NIL

Quebec

NIL

Ontario

Ad Hoc Bodies

Board of Arbitration (Crown Employees Collective Bargaining

Act)

Boards of Arbitration (Labour Relations Act)

Boards of Arbitration

Boards of Hospital Arbitration

Boards of Reference

Boards of Inquiry (Ontario Human Rights Code)

Boards of Inquiry (PCC)

Child Welfare Review Committees

Commissions of Inquiry

Conciliation Boards

Employment Standards Referees

Industrial Inquiry Commissions

Labour Relations Officers/Grievance Settlement Officers

(Crown Employees Collective Bargaining Act)

Mediators

Office of the Adjudicator

Ontario Provincial Police Arbitration Committees

Police Complaints Commission

Alcoholism and Drug Addiction Research Foundation (ARF)

Algonquin Forestry Authority

Boards of Governors — Colleges of Applied Arts and Technology

Clarke Institute of Psychiatry

Community Advisory Boards — Psychiatric Hospitals

District Health Councils

Liquor Control Board of Ontario

Local Housing Authorities

McMichael Canadian Collection

Metropolitan Toronto Convention Centre Corporation

Moosonee Development Area Board

Niagara Parks Commission

North Pickering Development Corporation

Ontario Cancer Institute

Ontario Cancer Treatment & Research Foundation

Ontario Casino Corporation

Ontario Educational Communications Authority

Ontario Energy Corporation

Ontario Food Terminal Board

Ontario Hydro

Ontario Institute for Studies in Education

Ontario Lottery Corporation

Ontario Mental Health Foundation

Ontario Municipal Employees Retirement Board

Ontario Northland Transportation Commission

Subsidiaries:

Air Dale Ltd.

Northern Canada Transportation Company Ltd.

Nipissing Central Railway Company

The Owen Sound Transportation Company Limited

The 75887 Ontario Limited

Star Transfer Limited

Ontario Pension Board

Ontario Share and Deposit Insurance Corporation

Ontario Stock Yards Board

Ontario Trillium Foundation — Board of Directors

Ontario Waste Management Corporation

Ortech Corporation

Ottawa Congress Centre

Province of Ontario Council for the Arts

Royal Ontario Museum

Science North

Stadium Corporation of Ontario Ltd.

Thunder Bay Ski Jumps Limited

Toronto Area Transit Operating Authority

Workers' Compensation Board

Workplace Health and Safety

Other government entities subject to non-intervention are those
pertaining to the legislative branch of government, including the
Legislative Assembly, Office of the Speaker of the Legislative
Assembly, the Legislative Library, Office of the Clerk of the
Legislative Assembly, Office of the Chief Election Officer, and
other offices and officers of the Assembly such as the Office of
the Provincial Auditor, the Information and Privacy
Commissioner/Ontario, and Ombudsman Ontario.

Column I
Transitional Procurement Policies and Programs

Quebec

Quebec excludes the purchase, lease or rental of goods related
to information technology until January 1, 1996.

Ontario

Ontario excludes the purchase or rental of goods related to
information technology from Quebec until January 1, 1996.

Column IINon-Conforming Procurement Policies and Programs

Federal Government

Industrial and Regional Benefits Policy

The Federal Government may seek national industrial and regional
benefits in procurement exceeding $2 million provided that the
evaluation of regional benefits is carried out in a
non-discriminatory manner with respect to regions for which the
Federal Government has a general framework of regional
development.

British Columbia

Purchasing Commission Act

Section 4 (2)(k) (Duties and powers of the commission) provides
that

"…the commission may … create opportunities and
programs to encourage local and regional suppliers or in favour
of environmentally sound supplies…"

Section 8 (Preference to local manufacturers) provides that

"The commission has power to give a preference … in the
case of goods required in a local area of the Province, in
favour of goods produced, manufactured or sold in that
area."

The RISP contract system (B.C.; Transportation and Highways)

The Forest Worker DevelopGovernment of the Northwest Territories (G.N.W.T.)ment Program (B.C. Forests)

Northwest Territories

Business Incentive Policy (BIP)

The will
continue to apply the BIP, or successor programs having similar
objectives, to all procurements by G.N.W.T. departments and
corporations, as well as communities and other organizations
which receive fifty-one (51) percent or more of funding from the
G.N.W.T. The program has the objective of compensating business
for the higher costs of northern operations. It operates to
discount bids from both northern and southern contractors on the
basis of northern and/or local content included in the tender.
Most tenders are publicly called and opened and details of the
program and its criteria are publicly available and generally
are included

Yukon

The Government of Yukon will continue to apply the following programs
or contracting conditions, or the successor programs and contracting
conditions having similar objectives, to all procurements by the
Government of Yukon.

Business Incentive Policites (BIPs)

The Business Incentive Policies which provide cash rebates for
the use of Yukon apprentices, the use of Yukon labour and
materials, and the provision of Yukon-made goods.

Community Contracting Policy

The Community Contracting Policy (CCP) which states that

"Government departments shall contract for goods and
services in the communities in which they are to be used, to the
extent that their needs can be met by community-bases
businesses."

Supplementary Conditions in Construction Contracts

The Supplementary Conditions which require cantractors to
provide adequate living accommodation, meals, and transportation
to the job site, and to make other "best efforts" to
hire locally.

Prince Edward Island

Public Purchasing Act Regulations

Section 11 exempts certain commodities, including those related
to highway maintenance and construction from the application of
the Act. The effect of section 11 is to create opportunities to
encourage local and regional suppliers.

Newfoundland

Provincial Preference Act, Chapter 37, 1984

"An Act to provide for the calculation and consideration of
the provincial content factor in the awarding of tenders by
government funded bodies."

Public Tender Act, Chapter 36, 1984

"An Act to provide for the calling of tenders for the
execution of public works and the acquisition of goods and
services by government funded bodies.